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ERISA for Nonprofit CEOs


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Highlights of ERISA (pension), Obamacare, HIPAA, GINA and other federal laws that C-level leaders of non profits should know.

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ERISA for Nonprofit CEOs

  1. 1. ERISA for the Nonprofit CEO Theodore P. Stein Whiteford, Taylor & Preston, LLP Simone Putnam, Raffa Managed HR Thursday, October 24, 2013 • Thrive. Grow. Achieve.
  2. 2. • • • • Employee Retirement Income Security Act of 1974, 29 U.S.C. §1001, et seq. Protecting Interests of Plan Participants and Beneficiaries Broad preemption of any state law that “relates” to employee benefit plan Federal court jurisdiction to enforce ERISA violations, plus attorney’s fees to prevailing parties
  3. 3. Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)  Health Insurance Portability and Accountability Act (HIPAA) of 1996  Genetic Information Nondiscrimination Act of 2008 (GINA)  Patient Protection and Affordable Care Act of 2010 (PPACA or ACA or Obamacare) 
  4. 4. Plan, fund or program • Established by an employer, employee organization, or both • To provide welfare or pension benefits • For employee participants or their beneficiaries ERISA, §3(1), (2)(A), 29 U.S.C. §1002(1), (2)(A) •
  5. 5. • Pension Plans – Exceptions: • Bonus programs • Group IRAs • Salary reduction plans under §403(B) • Top Hat Plans • Excess Benefit Plans • Code Section 457 and 409A Plans • Governmental Plans
  6. 6.  Welfare Plans ◦ Exceptions:  Wage payments for medical and other reasons  Maintenance of recreation, dining, or first aid facilities  Holiday gifts  Remembrance funds  Voluntary group insurance program  Scholarship programs
  7. 7.  Plan Administrator ◦ Person specifically designated in plan document ◦ If no so designated, plan sponsor is administrator ◦ Must provide plan documents upon request Plan Sponsor  Plan Fiduciary  Plan Participant and Beneficiary 
  8. 8. No formal writing, notice or reporting required  Employer’s intent is not relevant  Employer cannot opt out by non-compliance  Employer does not need to be involved in administration 
  9. 9. • • • • • Plan must be established and maintained in writing [29 U.S. C. §1102(a)(1)] Writing may consist of multiple documents Must authorize person and establish procedure to amend plan Must provide procedure for establishing funding policy Must specify how payments are made to and by plan
  10. 10. • Form 5500 – Annual report filed by plan administrator – Exceptions: • Insured or unfunded welfare plan with fewer than 100 participants • Certain group insurance arrangements • Top Hat Plans – Penalties: • $25 for each day report is unfiled (up to $15,000) • Secretary of Labor can assess civil penalty of up to $1,100 per day • Delinquent Filer Voluntary Compliance Program • • • • Summary Plan Description (SPD) Summary Annual Report (SAR) Summary of Material Modification (SMM) Summary of Benefits and Coverage (SBC)
  11. 11. Written summary for each employee benefit plan covered by ERISA  Must be written in manner understood by average plan participant  Must be furnished to participants within 90 days of becoming a participant (or to beneficiary within 90 days of first receipt of benefits)  Updated SPD must be provided every 5 years if amendments (or 10 years if no changes) 
  12. 12. Summary Annual Report (SAR) must be provided to participants and beneficiaries  Exemption for small insured or unfunded welfare and top hat plans  Deadline is 9 months after plan year close  Participant, beneficiary, fiduciary or DOL can bring suit to enforce  Criminal and civil penalties for violations 
  13. 13. SMM must be distributed when material modification of plan terms occurs  Recipients: Participants and beneficiaries receiving benefits  Must be calculated to be understood by average plan participant  Must be provided no later than 210 days after plan year ends 
  14. 14. Group health plans and health insurers must provide 4-page summary of benefits/coverage  Must be provided at application/enrollment  Notice of material modifications must be given 60 days prior to effective date  Must use standard definitions and terms as developed by Department of Labor 
  15. 15. Under prior law, no requirement to provide health care benefits  ACA requires large employers (inc. nonprofits) to provide affordable and minimum health care to full-time employees or pay penalties  Imposes requirements on small employers  Allows whistleblower claims under ACA procedures 
  16. 16. 50 or more full-time employees (including equivalents)  Full-time = 30 or more hours per week or 130 hours per month  Affiliated companies are combined  Special rules for seasonal and salaried employees who don’t keep track of their time 
  17. 17. Employer Mandate – Postponed to 1-1-15  Plan must be “affordable”  ◦ May not cost more than 9.5% of household income  Must provide “minimum value” ◦ Must pay out 60% or more of benefit costs incurred by plan  Employer Shared Responsibility Payments
  18. 18.  If no coverage is provided by employer ◦ $2,000 penalty multiplied by all full-time employees (excluding first 30) if one employee receives a federal subsidy via health marketplace ◦ Ex: Employer has 130 employees; annual penalty is $200,000  If coverage is “unaffordable” ◦ $3,000 multiplied by number of full-time employees receiving federal subsidies
  19. 19. Employers, including small employers, required to send notice of health insurance marketplace by October 1, 2013  For new employees, notice must be sent within 14 days of hire  Must advise employees of marketplace and employer’s health benefits plan if any  Model notices posted on DOL website 
  20. 20.  Whistleblower Protections and Claim Procedure ◦ No employer may discharge or discriminate against employee:  Who receives an ACA credit or subsidy or  Who reports an ACA violation to the employer or government agency or testifies in proceeding ◦ Employee has 180 days after adverse action to file complaint with OSHA
  21. 21. OSHA will investigate and can order interim reinstatement for “reasonable cause”  OSHA must provide findings and either party may object and request hearing  OSHA must issue final order within 120 days  If no decision issued in 210 days of complaint filing, complainant may sue in U.S. District Court and ask for jury trial 
  22. 22. Complainants need to show adverse action was “contributing factor”  Burden shifts to employer to show by clear and convincing evidence that same action would have resulted absent protected activity  ERISA §510 also bars interference with employee benefits  Rehire, back pay & attorneys’ fees available 
  23. 23. Investigation starts with letter or phone call  EBSA is assigned to enforce ERISA  DOL/EBSA can issue subpoenas, compel witnesses to testify under oath  “Voluntary compliance”  Remedies: Fines, civil lawsuits, criminal penalities 
  24. 24. Windsor: Section 3 of DOMA defining “spouse” and “marriage” to exclude same sex is unconstitutional  DOL TR 2013-04 (09-18-2013)  ◦ Under ERISA, “state of celebration” rule governs  Effects ◦ Health plan premium for same sex spouse is not taxable ◦ Marriage “penalty” now applies
  25. 25. Thank you! QUESTIONS? Theodore P. Stein, Esquire Whiteford, Taylor & Preston, LLP (301) 804-3617 Page 21